LONDON: Gold inched higher in Europe on Wednesday as the dollar steadied versus the euro after the previous day's gains, dampening selling pressure on the metal. However, the precious metal remains well below the five-week highs above $1,160 an ounce it hit earlier in the week, after China's decision to raise banks' reserve requirements dented appetite for commodities. "Gold sold off sharply Tuesday, taking prices back through the $1,142 breakout level of Monday," said technical analysts at Barclays Capital, who study past price movements to determine the future direction of prices. "With daily momentum oscillators rolling bearish from overbought territory, odds favour further near term weakness," they added. The dollar steadied versus the euro on Wednesday, while the yen fell as investors concluded that China's unexpected raising of banks' reserves requirement ratio would not derail growth. Oil fell almost $1 to near $80 a barrel after an industry group reported an unexpected rise in US distillate stocks, adding to growing fuel supplies despite a severe northern hemisphere winter. Stocks and commodities fell in Asia on Wednesday after China's surprise hike of banks' reserve requirements sparked investor concerns that the move could slow China's purchases of natural resources and other imported goods from Asia. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,115.884 tonnes as of Jan 12, down 3.657 tonnes or 0.3 per cent from the previous business day. US platinum and palladium exchange-traded funds launched last Friday were met with buying interest, with about 170,000 ounces of metals added in the first two trading sessions.

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